Delivery trends presage boom in China MRO biz

Rapid growth in the number of new aircraft being acquired by Chinese airlines, along with the announcement last August that United Airlines would send its Boeing 777s to Ameco Beijing for heavy maintenance over the next five years, suggests a busy future for the country’s maintenance, repair and overhaul (MRO) industry.

“The growth of the Chinese airlines means growth in the Chinese market itself will be really significant, especially over the next five to ten years,” Bussmann told Aviation International News. Overall growth of the Chinese fleet may not be as great as the number of new aircraft ordered might suggest, though. “There are still a lot of older aircraft flying around and some of the new aircraft will be used to replace old Russian types, so the total growth will be a little bit less,” he said.

The Chinese market is relatively tightly regulated, so it has not experienced the rash of low-cost start-ups seen elsewhere in the region. The number of aircraft ordered by each of the three major groups is approximately equal in proportion to its size, providing the basis for steady growth and development of the existing airlines. And the concentration on a handful of aircraft types with a limited range of engines, APUs and other equipment will reduce the diversity of products to be dealt with.

In combination, Bussmann said, these factors mean the country’s existing facilities can absorb the anticipated growth. “They may need to add one or two capabilities, as we did for thrust reversers [at Shenzhen], for example, but I don’t see any need for a lot of new MRO facilities,” he explained. “Provision for some products within China is definitely not ideal so far, but there are a couple of new airline shops in development whose capabilities are unknown at the moment, so there is still scope for growth, and capabilities can be added.”

Ameco Beijing has been successful in attracting business from operators in other countries, too. Customs clearance problems remain an obstacle, but clearly not enough of one to deter foreign customers for maintenance work. “They still have attractive labor rates and the number of trained staff keeps increasing–there is an aviation college within Ameco to address the qualification of the people and the definite need for more people working in the hangars–so everything is set up for good quality work and an adequate supply of people able to provide that quality,” Bussmann added.

Apart from the United Airlines 777 work, Ameco has recently won engine contracts from overseas customers, and others have sent work to Lufthansa Technik’s thrust reverser facility in Shenzhen. “We are still the only one with an autoclave in China, so we can do a lot of work there to cope with that growth,” Bussmann said.

Elsewhere in the region the picture is less stable. There have been a lot of start-ups, some of which are already beginning to consolidate, restructuring on the part of established carriers such as Malaysia Airlines and Thai Airways, and fleet rollovers (that is, replacement) such as those under way at Air New Zealand and Qantas.

The fleet renewals are also prompting airlines to review their existing MRO capabilities, with Air New Zealand, among others, opting to outsource its future requirements.

When airlines decide whether it would be more cost effective to outsource MRO functions, staff training and qualification is the big issue in Bussmann’s opinion. “If you look at [airlines in] the Middle East, India and the start-ups all over Asia, the number of trained mechanics, pilots and other personnel at the moment is definitely not sufficient. There are a lot of people but at the moment there are not enough with the right qualifications,” he explained. The result is a large number of expatriate mechanics working in the Middle East and here in Singapore.

Infrastructure, too, could prove an obstacle to growth in India, just as it did in China a few years ago when the authorities called a halt to airline expansion while training, maintenance and air traffic control capabilities were upgraded.

Japan has emerged as another dynamic market in the last couple of years. “Some low-cost carriers have set up there and we have been quite successful in winning them as customers,” said Bussmann.

For example, Lufthansa Technik will support new airline Star Flyer’s fleet of Airbus A320s under a total technical support contract, its first with an Asian carrier. Star Flyer is due to start operations on March 16, when the new airport at Kitakyushu is expected to open. Initially it will operate three A320s on 12 round trips each day between Kitakyushu and Tokyo’s domestic airport, Haneda. Lufthansa Technik will provide maintenance, engineering and component services and carry out airframe checks at its facility in Manila, the Philippines.

Another development in the region is growth in the previously negligible market for VIP completions. “We see growing interest, mainly on the part of successful business people but also from some of the bigger companies, for products like the A318 Elite and Leadership Select,” Bussmann added.

Both the Elite program, under which Lufthansa Technik will carry out cabin completion of corporate versions of the A318 for Airbus, and Leadership Select, which is the maintenance firm’s own concept for the Boeing Business Jet, were announced in November. Each program centers on a modular cabin that enables clients to select from a range of colors and materials.